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Then China started cracking down on cryptocurrency mining, causing crypto prices to fall even further. The IRS then revealed that it was getting stricter on collecting taxes on cryptocurrencies, which may also have contributed to the crypto crash.
Cryptocurrencies are also volatile, simply because they are highly speculative and many investors are always on guard. No one knows if the cryptocurrency will still exist in a few decades, and when prices start to drop nervous investors are more likely to panic, causing prices to fall even further.
Should we worry now?
While this most recent crash can be intimidating, the good news is that it’s not new to cryptocurrencies. Bitcoin has lost over 80% of its value on several occasions, and it has always rebounded. Ethereum even lost almost 95% of its value in 2018, but it was able to recover.
While past performance does not predict future returns, history has shown that the biggest names in the crypto space – namely Bitcoin and Ethereum – have been able to withstand volatility. Again, this does not guarantee that they will always recover, but these two cryptocurrencies have seen worse and have always been able to survive.
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